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> Posted by Ignacio Mas
Let me put it a bit brutally, using round numbers for effect:
- Many people are willing to pay an all-in cost of 70% for a microloan.
- Most people are willing to pay a fee of 7% for a (domestic or international) money transfer.
- Most people do not see much value in paying 0.7% in fees for a savings account.
Notice the order of magnitude reduction in willingness to pay. A savings account, viewed as an electronic receptacle of value, generates little willingness to pay – unless I need it to get a loan or make money transfers from/to it.
It would be much better if microcredit or money transfers were a lot cheaper, but the point is that if people are not able to get better terms, they still find sufficient value in these services to pay quite a bit for them. Not so with savings. Or, to be more precise, not so with the kinds of formal savings products that are being presented to them by formal financial institutions.
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> Posted by Elisabeth Rhyne
I wrote a blog post on the Huffington Post a couple of weeks ago, just thin
king out loud about something which suddenly seems absolutely central to financial inclusion: money management. How do people keep track of their finances? Will people new to formal financial services be inclined to use a bank account as a money management tool? How do financially excluded people manage their money?
I was hoping to start a conversation. I even sent the post to several colleagues experts in this area. But what I got was yawns and silence.
Almost. I did get 2 comments, both from a U.S. perspective. “SirVantes137” said that the best way to help poor people with money management, including himself, was to pay them better so they would have something to manage. “Samantha is Soo Savory” referred me to powerwallet, an online money management tool, which looks pretty interesting, and very relevant to the question.
But the conversation among financial inclusion folks failed to take off, so I’m trying again. Come on, people, think about this. It’s important! Read the rest of this entry »
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